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Public Disclosure Bar

Under the False Claims Act, a whistleblower may be precluded from filing a qui tam lawsuit based on information that has already been publicly disclosed by another source. This so-called “public disclosure bar” is designed to weed out “parasitic” actions from those brought by whistleblowers with true inside knowledge of fraud.

Here are some of the more recent court decisions on the scope and reach of this rule:

Early this month, the U.S. Court of Appeals for the Eighth Circuit declined to revive a whistleblower’s False Claims Act (FCA) suit, ruling that prior litigation and government reports triggered the statutory public disclosure bar, even though the public disclosures at issue did not mention the defendants in the case. The case, United States ex rel. Lager v. CSL Behring. LLC, concerned fraud in the prescription drug context.

The FCA’s public disclosure bar prevents whistleblowers from pursuing an action and recovering an award when the fraud was previously disclosed in certain ways—such as by the media—unless the whistleblower was the original source of the information. Although the contours of the public disclosure bar are often nuanced and fact-specific, the bar’s overall aim is to encourage whistleblowers with new and helpful allegations to come forward, while disqualifying parasitic or repetitive actions. In this case, the appellate court agreed with the lower court, finding whistleblower Shane Lager’s allegations fell into the latter camp. Click here for more.

There continues to be some uncertainty on just how far the so-called public disclosure bar reaches to prevent whistleblowers from bringing suit under the False Claims Act. It is a subject filled with such nuance and fact dependency there may never be complete clarity on how any one case scenario may play out. But thanks to a string of recent court of appeals decisions—four in the past month, from the Fourth, Sixth, Seventh and Ninth Circuits—there is at least some insight to be gleaned on this chronic whistleblower concern. Click here for more.

The Fourth Circuit ruled recently that a False Claims Act case must be dismissed because it was based on information that the attorney representing the qui tam plaintiff had learned during a prior litigation. In doing so, the court applied what has become known as the “public disclosure bar” – a provision in the False Claims Act that strips a court of jurisdiction to hear cases based on information that has previously been made public. Below is a more in-depth summary of the case, but it is interesting to note at the outset that the decision was based on the False Claims Act as it looked in 2009. It does not reflect amendments made in 2010, including significant amendments to the public disclosure provision.Click here for more.

Under the False Claims Act, the public disclosure bar prevents whistleblower suits challenging fraud already disclosed through certain public channels like the news media. The rule is designed to discourage whistleblower actions based on information already in the public domain, unless it was the whistleblower that actually put it there. It is supposed to neatly balance the twin-goals of discouraging so-called “parasitic” lawsuits and encouraging whistleblower suits based on true inside or independent knowledge. With last week’s United States ex rel. Moore & Company v. Majestic Blue Fisheriesdecision, the Third Circuit made a strong statement of the types of cases it sees on the right side of this sharp divide.Click here for more.

In a major victory for whistleblowers, the Ninth Circuit in United States ex rel. Hartpence v. Kinetic Concepts, Inc. narrowed the reach of two significant bars to bringing qui tam lawsuits under the False Claims Act. Under the so-called “public disclosure” bar, the Ninth Circuit reversed its own precedent and ruled the “original source” exception to the bar does not require the whistleblower to have played a role in the public disclosure. And under the so-called “first-to-file” bar, the Court took a similarly expansive approach, narrowing the circumstances under which one whistleblower action will bar a subsequently filed related action. Taken together, these twin rulings in this en banc decision reflect a clear recognition by the Ninth Circuit of the strong Congressional policy of encouraging and rewarding whistleblowers for supplementing government fraud enforcement.Click here for more.

Under the False Claims Act, a whistleblower may be precluded from filing a qui tam lawsuit based on information that has already been publicly disclosed by another source. This so-called “public disclosure bar” is designed to weed out “parasitic” actions from those brought by whistleblowers with true inside knowledge of fraud. There has been some disagreement among the courts as to how “public” a disclosure must be to fall within the bar. In Wilson v. Graham County Soil, the Fourth Circuit this week joined several other circuits in drawing a clear line as to how far the bar extends. According to the Court, it applies only to disclosures made outside the government.Click here fore more.